I. accordance with the reform process of the

I.            Tax System in Myanmar

1.           The Constitution of the Republic of
the Union of Myanmar, in Article 389, pronounces “Every
citizen has the duty to pay taxes to be levied according to the law”. The
Government has undertaken the tax reform program from 1988 and enhanced 2010
onwards. In accordance with the reform process of the country, Internal Revenue
Department under Ministry of Planning and Finance is implementing Tax policy
and Tax administration reform. The method to determine tax liabilities in
Myanmar has changed from official assessment system to self-assessment system
(SAS) with the establishing of large taxpayers office in 2014 and medium taxpayers
office in 2017. There are five major taxes in Myanmar such as Income Tax, Commercial
Tax, Special Goods Tax, Stamp Duties and State Lottery.

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2.           The
detailed types of taxes and duties collected and administering bodies are as
follows:

 

No.

Types of Taxes

Administering Bodies

1

Excise duty

Ministry of Home Affairs

2

Commercial tax

Ministry
of Planning and Finance

3

Import license fees

Ministry of Commerce

4

State lottery

Ministry
of Planning and Finance

5

Fees for vehicle, vehicle license and business license

Ministry of Rail Transportation

6

Stamp duty

Ministry
of Planning and Finance

7

Pearl oyster tissue implant tax

Ministry of Natural Resources and Environmental Conservation

8

Fees for travelling license, hotel and guest-house license, travelers
transporting license, tourism guide enterprise license

Ministry of Hotel & Tourism

9

Special goods tax

Ministry
of Planning and Finance

10

Income tax

Ministry
of Planning and Finance

11

Customs Duty

Ministry
of Planning and Finance

12

Taxes collected on land

Ministry of Home Affairs

13

Water tax

Nay Pyi Taw Council

14

Embankment tax

Ministry of Home Affairs

15

Forest product tax

Ministry
of Natural Resources and Environmental Conservation

16

Minerals extraction tax
(not including industrial raw
materials, minerals and
decorative stones)

Ministry of Home Affairs

17

Fisheries tax

Ministry
of Agriculture and Irrigation

18

Oil and natural gas extraction tax

Ministry
of Electricity and Energy

19

Mineral tax and gems stones tax

Ministry
of Natural Resources and Environmental Conservation

20

Communication service tax

Ministry
of Communication, Information Technology

21

Gratis tax collected on the generation of electricity from
water energy

Ministry
of Electricity and Energy

 

3.           Taxes on
Income

“Income” is defined as the
profits and other gains. Income tax is levied on total income under each of the
heads of income: (i) salaries; (ii) profession; (iii) business; (iv) property;
(v) capital gains; (vi) income from undisclosed sources; (vii) other sources of
income.

If a person
whose income exceed kyats 4,800,000 in a year is necessary to pay income tax
based on the total his or her income. Income tax will be levied on total income
after deduction of the allowances in accordance with Income Tax Law section (6).
If the income from salary or profession, business and other source of income is
above Kyats 4,800,000, the income will be levied as follows:                 

Brackets of taxable income
(Kyats)

Income Tax Rate

From

To

 

1

2,000,000

0%

2,000,001

5,000,000

5%

5,000,001

10,000,000

10%

10,000,001

20,000,000

15%

20,000,001

30,000,000

20%

30,000,001 and above

25%

                           

  For the company, business
and state-owned enterprises, 25% income tax are levied on the total net profit
before deduction the allowance.

  Property Tax is managed by the relevant local regulations.
The tax is charged on the annual value of land and the rate and calculation vary
on the purpose of use of the lands.

 If the total value of the
assets sold , exchanged or otherwise transferred within one year is not above
kyats 10,000,000 , income tax will not be levied on a capital gain. If the
total value is above kyats 10,000,000 , 10% income tax shall be assessed, in
kyats or foreign currency, on the capital gain of an individual person or a
group of persons except from the oil and gas companies1.

  In the case of income
from undisclosed source, the tax will be levied 30% on undisclosed source
income for citizens and foreigners before deduction of described tax reliefs
and allowances. If the citizen can approve the source of income used for buying,
constructing or acquiring any capital assets or establishing a new business or
expanding a current business, the income will be subtracted from the total
undisclosed income and the balance of income will be taxed with the rate
described in table below.   

 

Income

Income
tax rate

1
– 30,000,000

15%

30,000,001
– 100,000,000

20%

100,000,001
and above

30%

 

4.           Commercial
Tax

There
are four types of activities needed to pay commercial tax such as local
production and sales of goods, imported goods, trading and provision of
services. Apart from the goods that specified as commercial tax exemption, 5%
commercial tax is charged on the selling prices of goods produced and sold in
the country or the import goods’ landed cost. 5% commercial tax is levied on
the domestic services except from the services list that described as no
commercial tax is levied. In the case of selling and constructing of
buildings/apartments and condos, 3% commercial tax is levied and 1% on the sale
proceeds from selling gold jewelries. Exporting goods except certain natural
resources are not necessary to pay commercial tax.

 

5.           Special
Goods Tax

 

Special
Good Tax is levied on the imported specific goods, domestic production of
specific goods and the exported specific goods. There are 17 types of special
goods and some are SGT exemptions. Threshold does not exists in special goods except
from domestic production of tobacco, cheroots and cigars which does not exceed minimum
threshold of Kyats 20 million. If the special goods are imported goods, the
special goods tax will be levied on the landed costs. Special Goods Tax is
levied from 5% to 80% depending on the types of goods.

 

 

II.          Current issues in Myanmar

             

  Although reform in tax policy and
administration has been undertaken, challenges and issues still remain in Myanmar’s tax system. Even in
the Internal Revenue Department which is responsible for the taxation, the
knowledge on taxation is limited and it is also necessary to enhance the
capacity of the officials. Human resource is also limited in the Department to
handle the tasks related with taxes effectively and efficiently. Awareness of
Taxpayers on tax is required to be promoted.

1 In
oil and gas sector, the income tax is levied according to the profits. Up to
equivalent kyats 100 billion profits – 40% , From equivalent kyats 100
billion+1 to 150 billion profits– 45% , Equivalent kyats 150 billion+1 and
above profits – 50%